In May of 2011, the Supreme Court of Texas acknowledged that appraisal clauses in Texas insurance policies provide a means to resolve disputes about the amount of loss for a covered claim.
More importantly, the Court held that mandamus relief is appropriate to enforce an appraisal clause because denying the appraisal would vitiate the insurer's right to defend its breach of contract claim.
In even stronger language, the Court noted that "[t]his [appraisal] could short-circuit potential litigation and should be pursued before resorting to the courts.
" Although the Court recognized the validity of the appraisal clause as a contractually agreed process to potentially resolve all contractual disputes between the insurer and the policyholder, the Court held that "the trial court's failure to grant the motion to abate is not subject to mandamus, and the proceedings need not be abated while the appraisal goes forward.
" As a basis for its decision that abatement is not required, the Court relied on the language of its prior 2002 opinion where the Court noted that the trial court has "some discretion as to the timing of the appraisal.
" The question remains: why does the trial court's have discretion whether to abate a case until the appraisal process is completed? In 2009, the Supreme Court noted that "appraisals generally resolve such disputes" and that "the results [of appraisals] can be challenged later if the insureds were dissatisfied.
" I have not identified any case where the Court explains in any real detail its reasoning that abatement is not required while the appraisal process is ongoing.
From the cases I have reviewed, it appears that only basis for this conclusion comes from the Court's 2002 statement that the trial court has "some discretion as to the timing of the appraisal.
" Based on the Supreme Court's most recent comments on the validity of the appraisal, does the trial court really have discretion on the timing of appraisal, once invoked? I am uncertain whether it logically follows that the trial court has discretion on the timing of appraisal when appraisal clauses must be enforced, and appraisal is a condition precedent to filing suit.
It also seems to be an illogical leap for the Court to determine that appraisal may resolve all contractual issues made the basis of the suit while at the same time ordering costly discovery to proceed on claims that may be mooted by the outcome of the appraisal process.
More importantly, the Court held that mandamus relief is appropriate to enforce an appraisal clause because denying the appraisal would vitiate the insurer's right to defend its breach of contract claim.
In even stronger language, the Court noted that "[t]his [appraisal] could short-circuit potential litigation and should be pursued before resorting to the courts.
" Although the Court recognized the validity of the appraisal clause as a contractually agreed process to potentially resolve all contractual disputes between the insurer and the policyholder, the Court held that "the trial court's failure to grant the motion to abate is not subject to mandamus, and the proceedings need not be abated while the appraisal goes forward.
" As a basis for its decision that abatement is not required, the Court relied on the language of its prior 2002 opinion where the Court noted that the trial court has "some discretion as to the timing of the appraisal.
" The question remains: why does the trial court's have discretion whether to abate a case until the appraisal process is completed? In 2009, the Supreme Court noted that "appraisals generally resolve such disputes" and that "the results [of appraisals] can be challenged later if the insureds were dissatisfied.
" I have not identified any case where the Court explains in any real detail its reasoning that abatement is not required while the appraisal process is ongoing.
From the cases I have reviewed, it appears that only basis for this conclusion comes from the Court's 2002 statement that the trial court has "some discretion as to the timing of the appraisal.
" Based on the Supreme Court's most recent comments on the validity of the appraisal, does the trial court really have discretion on the timing of appraisal, once invoked? I am uncertain whether it logically follows that the trial court has discretion on the timing of appraisal when appraisal clauses must be enforced, and appraisal is a condition precedent to filing suit.
It also seems to be an illogical leap for the Court to determine that appraisal may resolve all contractual issues made the basis of the suit while at the same time ordering costly discovery to proceed on claims that may be mooted by the outcome of the appraisal process.
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